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By James A. Gage
I read recently that of the
people who become landlords, roughly 85% of them file
bankruptcy after five years.
Why the sky-high failure rate? After mentoring new investors
for 16 years, I know it’s because people go into real
estate investing with “pie in the sky" expectations
that don’t pan out.
We all know about the late night talk show gurus who
promise you can become a millionaire overnight using their
“proven" tactics. The fact is, however, that what
separates the successful investors from those that fail
isn’t luck or fortune or hard sell tactics.
What makes people successful is hard work . . . with a
little luck thrown in. I know that isn’t what you want
to hear. But the truth of the matter is, successful real
estate investors don’t need to watch late night TV
gurus because they’ve taken to heart – and continually
practice – the following seven traits:
Success Trait # 1: Successful investors prepare
themselves mentally.
It’s easy to get caught up in the hype regarding real estate
investing. You hear or read the stories of people becoming
millionaires almost overnight – and you want a piece of the
action, too. Tomorrow, preferably.
A new investor, believing the hype, becomes impatient and
foregoes preparation and education. He then ends up in over
his head with his first deal, and when the deal goes sour,
he blames it on the late night guru who sold him a bum deal.
Savvy investors, on the other hand, patiently lay a solid
foundation.They take the time to educate themselves about
real estate, financing, and negotiation so that when
that first deal comes along, they’re mentally and
knowledgably prepared to ride out the inevitable ups and
downs.
Success Trait #2: Successful investors work with mentors.
Real estate investing requires skill, patience, and
street-savvy knowledge – knowledge you won’t get from a guru
who has written a best-selling book but hasn’t practiced in
years.
No matter what their experience level, savvy investors
work with experienced coaches or mentors to help them get to
the next level.
You can either pay a person to work with you or you can
partner with a successful investor on a deal. Either way,
you want to find someone who is actively practicing what you
want to accomplish and model your behavior after him or her.
(Note: Experienced investors can smell couch potato
investors a mile away. So have your game plan ready and be
ready to get to work.)
Success Trait #3: Successful investors never give up.
It’s a negative world out there – and your spouse,
co-worker, or relative can destroy your confidence and drive
with statements such as, “What you’re doing is sleazy," or
“You’ll never become wealthy – you don’t have the drive."
Even worse, however, is your own negative self talk –
especially if you’re tried real estate investing in the past
and weren’t successful or if your early deals haven’t worked
out. Beating yourself up is debilitating. The louder your
negative self-talk, the easier it is to second-guess
yourself and/or not proceed to the next step in your growth
process.
Successful investors know past events don’t determine future
incomes. They keep a positive mental attitude and
consistently work toward their goals even when faced with
negative outcomes or criticism. They know that a “no" today
doesn’t mean a “no" tomorrow. In short, they don’t give up.
Success Trait #4: Successful investors work consistently.
One of the biggest mistakes new investors make is assuming
that real estate investing is a 100-yard dash – when it’s
really a 26-mile marathon.
A new investor, for example, will attend a training course
and come out pumped up and ready for action. After putting
two 40-hour weeks with no results to show for his efforts,
the newbie investor becomes tired and burned out and ends
up quitting within three months.
Investors who have achieved success learned that consistency
is what matters. Whether they work 20 minutes a day or 20
hours a week, they devote time to their craft on a regular
and consistent basis. Doing so ensures they keep up their
momentum and drive – which is why they’re ready when that
deal they’ve been waiting for “magically" appears.
Success Trait #5: Successful investors continually invest
in themselves.
Consider golf pro Tiger Woods: although he’s won the PGA
Masters three times plus dozens of other championships, he
didn’t decide to slow down and coast on his success.
Instead, he worked with a coach to make his golf swing
more efficient. He’s now the #1 ranked golfer in the
world.
No matter how successful you become, you must continually
invest in yourself. Like Tiger Woods, successful
investors invest in themselves by attending seminars and
conferences, joining networking groups, reading books, and
hiring coaches or mentors to help them reach the next step.
Success Trait #6: Successful investors understand Return
on Investment (ROI).
It’s a fact: entrepreneurs are often times the worst
business people – meaning they have the vision needed to get
a business up and running back lack the practical
application for making sure it becomes profitable. (This is
why eBay has Meg Whitman at the helm, not the original
founder.)
Ditto for real estate investors. How often have you heard
someone brag, “I put hundreds of hours into this deal!" – as
if spending all that time is a good thing. If you spent
hundreds or thousands of hours putting together a deal, and
your profit is only $5,000, then you’re not making much
more than the person flipping hamburgers.
Experienced investors know that calculating a deal’s ROI
is crucial for ensuring future success. They keep track
of their time and the funds spent/earned to ensure their
business remains profitable.
Success Trait #7: Successful investors have a financial
plan.
Once you start generating cash flow from your investments,
it’s very easy to fall into the trap of spending money –
especially if you lived frugally in order to build your
investment business. Dinners out, fancy vacations, and a
spiffy new car can wreck havoc with your bank balance.
Instead of spending your money, take a tip from successful
investors and work with your accountant or financial
planner to develop a plan. Your financial plan should
allocate monies that support your lifestyle and family,
investments in yourself and/or your business, savings for
future endeavors and retirement, and donations to your
favorite charities.
"You are who you are and where you are because of what you
have put into your mind."
For more information or pricing please do not hesitate to
call or e-mail. I can be reached at (508) 595-9567.
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